Diamond bank has lent over N75 billion to the Micro and Medium Scale Enterprises (MSMEs), the Managing Director of Diamond Bank Plc, Dr. Alex Otti has said, explaining that the bank has continuously focused on small businesses in its portfolio lending because those businesses help to create jobs in the economy.
Otti, who spoke during the just concluded International Monetary Fund/World Bank conference in Washington DC, on the topic, ‘Beyond 2015: Pathways to Addressing Africa’s Unemployment Challenge,’ said MSMEs, are better placed to create and provide jobs and boost the Gross Domestic Product (GDP) than the multinationals in our midst.
“That is what we have started doing in Diamond Bank, having a change in mindset. Basically if we look at your business, your cash flow and everything and we think the business can pay itself, we lend the money,” he said, adding, “we have found out we are not losing money by doing that, instead we are creating jobs and opportunity for people, and by doing that, we have over N75billion in the hands of MSMEs.”
He said if you look at it critically, about 99.7 per cent of every business will qualify as MSMEs, meaning that is about 99 per cent of the Gross Domestic Product (GDP). He said In India, 90 per cent of the GDP is accounted for by the MSMEs, “ but you find out that the big businesses that we are talking about, like MTN, Chevron, Shell, they may be big in their numbers, but may not generate the kind of employment that will take our people out of the streets, stating that apart from Uganda, every other African country is under the scourge of unemployment.
He warned that if nothing was done, the development could result in dire consequences for the Continent. “People easily become tools in the hands of people who use them because they are unemployed, and that is why you see a young person tie a bomb around his waist and blow himself up, because he looks at himself and doesn’t see a future. We have a collective responsibility to support every initiative that will create jobs and employment for people.”
Otti who made his presentation alongside former U.S Ambassador to Nigeria, Dr. Robin Renee Sanders, among others, said virtually all the countries in Africa have high unemployment rate. “Nigeria has over 24 per cent unemployment rate, South Africa has over 26 per cent, while Congo has over 50.6 per cent, wih the exception of Uganda which has four per cent. When compared with other countries, India has 3.5 per cent with a population of over 1.3billion people, and China has four per cent, with a population of over two billion people. So its incredible that those people we are comparing ourselves with have four per cent and we have over 24 per cent, and you see America and the UK talking of unemployment rate of over seven per cent, so it is a disaster that is waiting to happen., and the earlier we addressed it the better,” he added.
He said despite the challenges associated with financing small businesses, the risks are minimal, urging that financial institutions should have a paradigm shift away from insisting on provision of collaterals to engaging the MSMEs to develop their businesses and generate bankable products. To achieve this, he said Diamond Bank has lined up a series of engagements, involving experts and the World Bank Group to raise and nurture MSMEs.
